Abstract:
In present era competitive world having business is very important to control various
costs to sustain in the market. To sustain in the market, inventory management plays
an important role to make a control over the financial statement of the organization.
Inventory represents an important decision variable at all stages of product
manufacturing and sales, in addition to being a major portion of total current assets of
many manufacturing organizations. Secondary data collection method was used in
this research. Secondary data from 2014 to 2018 was gathered for the analysis from
the annual reports of twenty three manufacturing companies listed on the Colombo
Stock Exchange. Measures of return on assets were examined and related to proxies
for efficient inventory management by manufacturers. There were 35 manufacturing
companies listed on Colombo Stock Exchange and 23 manufacturing companies were
selected as sample using purposive sampling method. Data availability of the
variables of this study was only 23listed manufacturing companies.
Further collected data were analyzed by using the STATA-15 package for interpreting
and obtaining conclusion. Descriptive statistics, unit root test, diagnostic test and
regression models are used for analyzing this research. All these tests are used so as to
correlate the theories contributed by the literature by several authors with the
statistical results. The main objective of this study is determining the impact of
inventory management on financial performance of listed manufacturing companies
in Sri Lanka. The overall research findings indicate that there is a significant positive
impact of inventory management on financial performance- The results indicate the
raw materials inventory turnover has moderate positive relationship with return on
assets. As well as. it shows that there is a weak positive relationship between work in
progress inventory turnover and finished goods inventory turnover. Findings of this
research help to make effective decision of the company investors, mangers, students,
and users. They can get knowledge about how inventory management to be effect on
return on assets of listed manufacturing companies in Sri Lanka'
